Address by Gazprom Management Committee Chairman Alexey Miller at 13th International Investment Forum Sochi-2014

This year is historically important for the national gas industry and Gazprom in particular. The 30-year contract to annually supply 38 billion cubic meters of gas to China has been signed and we have entered into the world’s potentially greatest gas market. Moreover, we have actually secured the direct interaction between the two biggest markets – Europe and Asia. Until recently, these markets interacted indirectly with each other.

Address by Gazprom Management Committee Chairman Alexey Miller at 13th International Investment Forum Sochi-2014

Alexey Miller

European market is number one for us, and we are the number one supplier for Europe. It should be noted however, that in the last decades our gas industry has evolved at a faster pace than the European gas market, and today our potential in the gas industry is far superior to the EU gas market potential. At the same time, energetic activity is no longer observed in the European gas market. Domestic production has slumped in the EU. Europe has lost the battle for the LNG to Asia. The end-user market is stagnating. And on top of all that, the old Europe is struck by the spot myopia. It’s hard for her now to look beyond the horizon of the short- and medium-term planning. The result is the lack of global strategies, global positioning and global projects.

What will happen in ten years? Firstly, we think that the trends that have emerged for us in the last few years, will persist. And these trends – the ones that concern the market share – are very, very positive for us. Since 2010, the Russian gas share has increased to 30 per cent in the EU consumption. Four years ago it was 23 per cent. What is more remarkable is that the Russian gas share in the EU imports will exceed 64 per cent by the end of 2014, thus showing a 17 per cent increase in four years.

Therefore, when it comes to what will happen in ten years: it’s absolutely clear that physical volumes of supplies will grow, the share of imports will increase, and what is most important, we will be able to fully meet all the demand of the EU for natural gas.

Asian market is the most booming, dynamic and promising one featuring a 15 per cent growth per year. Most importantly, the potential of our gas industry is absolutely comparable with the potential of Asian gas market.

Doing business in Asian gas market is a completely different matter, compared to the European one. If you sign a contract, it means that the contracted volumes total 30 billion cubic meters or over, and the contract itself will be effective for 30 years and more. Just in one day our esteemed Chinese partners came near Germany, our major gas consumer, and secured the purchase of Russian natural gas at 40 billion cubic meters per year. It was a long journey of 40 years for Germany to reach the similar gas purchase level. A question arises here – in 40 years, what would be the outcomes of our partnerships in Asian market?

Talking about the scale of our projects – on September, 1 we launched the Power of Siberia gas pipeline construction, the joint Russian–Chinese project. As of today, it is the biggest construction project in the world in terms of its scale and investments – USD 55 billion will be allocated for fields’ pre-development and linear part construction just in Russia. Projects, strategies and positioning have a global nature, and this give me confidence to say that in ten years Russia and China will be strategic partners in the global energy market.

Linked with Russia, Asian market will be able to get more and more influence on the European market. It’s a little bit too early to say now what kind of influence it would be, but indeed we will evidence the outcomes very soon.

I am absolutely confident that the future will be brighter in the East.

Alexey Miller (in center) at 13th International Investment Forum Sochi-2014
Alexey Miller (in center) at 13th International Investment Forum Sochi-2014

Alexey Miller (in center)